April construction output slows down, but consumer demand for new housing remains high, says RSM

In April 2022, the volume of monthly construction output decreased slightly by 0.4% (£14.9 million), the first monthly decline since October 2021, according to the latest Office of National Statistics figures. 

The decrease in monthly construction output in April 2022 came from a fall in repair and maintenance (2.4%), which was offset slightly by a rise in new work (0.9%); the fall is partly a by-product of the growth (3.0%) in March 2022, because of the demand caused by the repair work experienced from storms Dudley, Eunice and Franklin in February 2022.

Despite the monthly decrease, construction output increased 2.9% in the three months to April 2022; this is the sixth consecutive growth in the three-month on three-month series, with increases seen in both new work and repair and maintenance (2.2% and 4.0%, respectively).

Commenting on the Construction output data Kelly Boorman, partner and national head of Construction at RSM UK, said: ‘The latest figures show a slight decrease for monthly construction output, due to the ongoing challenge of labour shortages and managing the pipeline of work, which raises long-term sector concerns regarding resource, especially as commercial work increased in April. 

‘Despite the slight decrease in monthly output and growing nervousness about inflationary prices and a looming recession, the sector continues to show resilience in response to adverse conditions brought about by the pandemic, the Russia-Ukraine crisis and the latest lockdowns in China. In addition, as prices for raw materials such as steel start to stabilise, the sector has had to set aside its uncertainties, leading to the uptick in commercial work, showing that production has caught up with market demand.  

‘Although new housing levels have fallen, affordable housing is high on the government’s agenda as the prime minister looks to reset his leadership after the confidence vote, by expanding the ‘Right to Buy’ policy and providing social housing tenants with the opportunity to purchase their own homes. This, coupled with house price increases slowing down, indicates that while output in new housing has dropped, we can expect demand to continue as first-time buyers look to get on the property ladder. 

‘Considering the government’s recently published Procurement Policy Note on future net-zero commitments for major contracts, the construction sector also needs to prepare for its next set of challenges – managing ongoing labour shortages with a strong pipeline of work alongside ambitious ESG targets.’